SPX at a decisive point

Against our expectations, the rollover in the Chinese stock market has not materialized, and the SPX broke above the downward-sloping channel. Currently, the SPX trades near the $4,500 price tag. In the following days, we will pay close attention to whether it will manage to hold above the upper bound of the channel. If it fails, it will raise our suspicion over the potential reversal. Contrarily, if the SPX succeeds, it will be positive in the short term. On top of watching the channel, we will monitor RSI, Stochastic, and MACD on the daily chart. To support a bullish thesis, we would like to see Stochastic and MACD keep rising and the RSI break above 70 points. However, a flattening of MACD and Stochastic combined with a failure of RSI to perform a breakout will act as a warning sign.

Illustration 1.01

Illustration 1.01 portrays the daily chart of SPX within a downward-sloping channel. The yellow arrow indicates a bullish breakout above the channel’s upper bound.

Illustration 1.02

Illustration 1.02 shows the daily chart of SPX and simple support/resistance levels derived from peaks and troughs.

Technical analysis gauge
Daily time frame = Bullish
Weekly time frame = Slightly bullish
*The gauge does not necessarily indicate where the market will head. Instead, it reflects the constellation of RSI, MACD, Stochastic, DM+-, ADX, and moving averages.

Please feel free to express your ideas and thoughts in the comment section.

DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.